Tag Archives: cheap gas

The immediate cause is the coronavirus, which gets worse every day. Worse, by the numbers. Daily, there are more deaths, more people have it and the virus is spreading, covering a wider area.

Conspiracy theories abound. In the US, some people are saying that the virus is being spread to undermine Trump and give the Democrats victory in November. How does that explain it’s a bigger problem in Italy, in the UK, China and elsewhere, countries with no election this year, or any other year, in the case of China.

Nations are reacting to what promises to be a major game changer in the global economy. Tourism has ground to a halt, flights are empty, delivery of goods suffering major delays, employees are dying, and there’s no end in sight.

In the UK, Rishi Sunak, Britain’s new Chancellor of the Exchequer (finance minister) delivered a very professional budget speech that was over an hour long. He’s the first Indian to be appointed to the second highest political office in the land, the first Hindu (sworn into office with a Hindu holy book) and at only 39, one of the youngest chancellors in history. His budget was the first one since Britain left the EU, the first in almost 50 years that Britain has been totally independent. The budget was scheduled weeks ago, before the virus, but it gave the government the opportunity to tackle it from the financial perspective. It’s going to cost billions of pounds (dollars or euros), increasing deficits and threatening the international exchange rate of currencies. The stimulus package promised this morning in Britain is thirty billion pounds ($39 billion).

It’s unpredictable – but it’s very real. It will affect President Trump’s chance of reelection, but it’s not a deliberate attempt to thwart his success. The medical crisis will inevitably affect the economy, which may affect the election, though its doubtful anybody else could manage the crisis better. In the UK it is estimated that, at the peak of the crisis, one fifth of all workers will have to stay home.

The virus started in Wuhan, China. We may never know exactly what caused it, but pigs, bats and pangolins seem the most likely candidates. But there is also a government laboratory in Wuhan. The suspicion is also that it might have been a biological warfare experiment gone wrong.

MR

Putin forever — Russian president Vladimir Putin is backing sweeping constitutional changes that would allow him to stay at the helm of the country until 2036. (Financial Times) If approved, the reforms would give Putin the option to serve another two terms and cement an unbroken run of 24 years as president and 36 years in power. A “people’s vote” referendum is due next month. The New York Times notes that 36 years is longer “than Stalin but still short of Peter the Great, who reigned for 43 years.” (Financial Times Brussels Briefing, 3/10/2020)

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WHY GAS IS CHEAP

For three years, Russia and Saudi Arabia, the world’s two largest oil exporters, had a deal to prop up global crude prices by limiting production. They calculated that by producing fewer barrels, rising prices would make each barrel worth more.

Over the weekend, that deal collapsed when Russia backed out, allegedly because it decided that higher prices were also providing an unexpectedly large boost for the US oil industry, which has expanded its market share by increasing production by nearly 50 percent since the Russia-Saudi (formally, Russia-OPEC) deal began in late 2016. A lot of that increase has come from US shale oil.

Saudi Arabia, eager to show Russia that its market power is not to be ignored, slashed the price at which it sells its own oil, and moved to sharply boost production. The expected flood of new Saudi supply dropped global oil prices by more than 30 percent on Monday, the biggest overnight drop in almost three decades. Stock markets, already wobbly thanks to coronavirus, took a dive.

Now Moscow and Riyadh appear locked in a price war – a crude game of chicken that could last for weeks or even months. Oil markets are reeling because this conflict comes just as the coronavirus clobbers demand for oil as factories close, and as international shipping and air travel slow dramatically. More supply + less demand = price collapse. (Signal, the Gzero Newsletter, 3/10/2020)

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The Organization of the Petroleum Exporting Countries publishes its latest oil report today, amid turmoil. OPEC and its allies met on March 5th and 6th to discuss production cuts to boost the oil price. Russia refused a deal, stunning the market. Saudi Arabia then said it would ramp up production next month and lower its selling price. On March 9th the price of Brent crude fell by 24%, its biggest one-day drop since 1991. There is a chance that Russia and Saudi Arabia will compromise, but most analysts think the price war is more likely to continue, as they battle for market share and try to squeeze the shale companies that have made America the world’s biggest oil producer. Saudi Arabia’s low production costs mean it can fight fiercely, but not without suffering. The kingdom requires oil to top $80 a barrel to balance its budget. This year’s average may be less than half that. (The Economist, 3/10/2020)

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FRANCE SET TO BECOME MUSLIM

Domestically, the past fifty years of steady immigration from Islamic countries into France is “transforming the fabric of French society” from within. Demographic and sociological surveys indicate that 10-15% of the French population is now of Muslim origin, including 20-30% of French citizens or residents under the age of 25. Some integrate successfully, but many align with the most radical and militant expression of the religion. Their rejection of France’s secular constitution is matched by resentment of the French military’s fight against global jihadism in Africa and the Middle East, seen as a “deliberate assault … on Islam.”

Whereas religious zeal is steadily increasing among French Muslims, Gurfinkiel said that “the classic national religion of France, Catholicism,” is declining, citing research found in The French Archipelago (L’archipel français) by French pollster, demographer and sociologist Jérôme Fourquet. Traditional family and marriage are “unraveling among the native French,” while birthrates drop. (“A very good chance of Islamists conquering France”, Marilyn Stern, MEF, 3/7. Interview with Michel Gurfinkiel, of the Paris based Jean-Jacques Rousseau Institute.)

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The Western Armament Community (II) German-Foreign-Policy.com * (10 March 2020)

Germany, the EU and the western powers altogether have increased their already dominant share of the booming global arms export, according to a report on international arms transfers published by the Stockholm International Peace Research Institute (SIPRI) yesterday. Germany is the fourth largest arms export nation. With a 26 percent share, the EU is well ahead of Russia (21 percent) and behind the USA (36 percent). Two thirds of the world’s exports of heavy war machinery are attributed to arms manufacturers in North America and Europe (excluding Russia). SIPRI’s list of recipient states is a clear indication of current and future hot spots. Six of the top ten global arms importers are located in the Arab world, particularly at the Persian Gulf. One sixth of all arms exports are being delivered to western allies in the power struggle with China in East and Southeast Asia and in the Pacific realm – with German arms exports being an integral part.(More… https://www.german-foreign-policy.com/en/news/detail/8213/)

(Stockholm, 9 March 2020) — International transfers of major arms during the five-year period 2015–19 increased by 5.5 per cent compared with 2010–14. According to new data from the Stockholm International Peace Research Institute (SIPRI), the largest exporters of arms during the past five years were the United States, Russia, France, Germany and China. The new data shows that the flow of arms to the Middle East has increased, with Saudi Arabia clearly being the world’s largest importer.

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Significant increase in arms exports from the United States and France
Between 2010–14 and 2015–19, exports of major arms from the USA grew by 23 per cent, raising its share of total global arms exports to 36 per cent. In 2015–19 total US arms exports were 76 per cent higher than those of the second-largest arms exporter in the world, Russia. Major arms transferred from the USA went to a total of 96 countries.

‘Half of US arms exports in the past five years went to the Middle East, and half of those went to Saudi Arabia,’ says Pieter D. Wezeman, Senior Researcher at SIPRI. ‘At the same time, demand for the USA’s advanced military aircraft increased, particularly in Europe, Australia, Japan and Taiwan.’

French arms exports reached their highest level for any five-year period since 1990 and accounted for 7.9 per cent of total global arms exports in 2015–19, a 72 per cent increase on 2010–14. ‘The French arms industry has benefited from the demand for arms in Egypt, Qatar and India,’ says Diego Lopes Da Silva, SIPRI Researcher.

Other notable developments:

Germany’s arms exports were 17 per cent higher in 2015–19 than in 2010–14.

China was the fifth-largest arms exporter in 2015–19 and significantly increased the number of recipients of its major arms: from 40 in 2010–14 to 53 in 2015–19.

South Korea’s arms exports rose by 143 per cent between 2010–14 and 2015–19 and it entered the list of the top 10 largest exporters for the first time.

Israeli arms exports increased by 77 per cent between 2010–14 and 2015–19 to their highest-ever level.

West and Central European states had outstanding orders at the end of 2019 for imports of 380 new combat aircraft from the USA.

Egypt’s arms imports tripled between 2010–14 and 2015–19, making it the world’s third-largest arms importer.

Brazil’s arms imports in 2015–19 were the highest in South America, accounting for 31 per cent of the subregion’s arms imports, despite a 37 per cent decrease compared with 2010–14.

South Africa, the largest arms importer in sub-Saharan Africa in 2005–2009, imported almost no major arms in 2015–19.

Germany ‘should join in French nuclear deterrent’The former Airbus executive Tom Enders urged Berlin to do the “unthinkable”
by Oliver Moody, Berlin, 6 March 2020, The Times (of London)

Germany has been urged to work with France on a joint nuclear deterrent amid doubts about President Trump’s readiness to stand by Europe in a military crisis. Tom Enders, the former chief executive of Airbus, called on Berlin to overcome its taboo against atomic weapons and buy a stake in the French force de frappe (strike force), consisting of some 290 warheads. President Macron recently offered EU leaders a “strategic dialogue” on the role of France’s nuclear arsenal. The German response has so far been ambivalent. The country is covered by the US “nuclear umbrella” through its membership of Nato. It is an open secret that Germany hosts about 20 American warheads at the Büchel airbase, near the Belgian border. The weapons are under the… [Paywall].
(https://www.thetimes.co.uk/article/germany-should-join-in-french-nuclear-deterrent-g7vcz63rf)

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TO THE POINT

BIDEN BID – With primary wins in Michigan, Missouri, Mississippi and Idaho, Joe Biden took a commanding lead over Bernie Sanders for the Democratic presidential nomination. The two are even neck-and-neck in Washington, expected to go to Mr. Sanders. Sights are already on Florida, the big prize next Tuesday, where Mr Biden leads in polls. The race is his to lose. (The Economist, 3/10/2020)

The Bank of Englandcut interest rates from 0.75% to 0.25% to cushion the economic blow from coronavirus. It also announced a new scheme to provide cheap funding for banks that increase loans to small and medium-sized firms, and capital buffers were cut to ease credit conditions further. The bank’s rate-cut follows cuts in America, Canada and Australia. (The Economist, 3/10/2020)

The Democratic Republic of Congo, the biggest country in sub-Saharan Africa, confirmed its first case of covid-19. Cases have also been recorded in South Africa, Nigeria and Senegal. The World Health Organization has warned that the greatest concern is that the virus spreads “to countries with weaker health systems which are ill-prepared to deal with it”. (The Economist, 3/10/2020)

I took one of my grandsons to see “The Call of the Wild” Monday night. It’s the third or fourth version of the Jack London classic I’ve seen. This one was the best. It was good, family entertainment. Try to see it before it leaves the big screen.

My wife and I have been watching “Beecham House”, a PBS series set in British India in 1795. Although it has the usual anti-colonial stance, we found it very enjoyable.